Roche Holding AG ROG

We're maintaining our $58/CHF 426 fair value estimate for Roche following solid 8% constant currency sales growth in the third quarter that reflects strength in the firm's core franchises. Management raised full-year 2021 guidance to mid-single-digit sales and similar core EPS growth, from low- to mid-single-digit growth, partly due to the rise of the delta variant and higher than expected continued sales of Roche's COVID-19 diagnostics (PCR and antigen tests, with CHF 4.6 billion in sales in the past 12 months) and treatments (antibody cocktail Ronapreve and immunology drug Actemra, which likely saw roughly CHF 2 billion in COVID-19 sales in the past 12 months). While visibility on future demand for COVID-19 products is weak, we generally expect lower demand in the fourth quarter, followed by a significant drop-off in 2022, which assumes that vaccines become available globally and that a new vaccine-resistant variant does not emerge.